The Olive Oil Industry Model Is “Broken”

The CEO of one of the major suppliers of olive oil was recently quoted as saying – “the olive oil industry’s business model is broken” – “consumers are moving away from olive oil” – “we are confusing the consumers” – “there is no formal standard” – “it’s a mess”.

The olive-oil industry’s business model is “broken”, with consumer demand falling and the sector set to see surplus production, Pierluigi Tosato, the CEO of Deoleo, one of the sector’s largest suppliers, has warned.

“Consumers are moving away from olive oil,” Tosato told an industry conference this week. “We will have an excess in production in the next years. The demand is not going the way it should go.”

Tosato, who joined the Bertolli and Carbonell owner in 2016 from Italian FMCG giant The Bolton Group, said the criticism from producing countries to imports had eroded consumer confidence. He also claimed moves by retailers to use olive oil as a loss leader had led the product to be seen as a commodity.

“In Spain, internal demand dropped, the market is dominated by private label. Olive oil is perceived as a traffic builder by the retailers and, of course, volume is more important than value. And the retailers are asking only for a promo price because they see the category as a traffic builder – nothing more than that,” Tosato said at the North American Olive Oil Association’s 2018 Olive Oil Conference, according to quotes carried by industry publication Olive Oil Times and confirmed to just-food by Deoleo.

In its review of Tosato’s speech, the association emphasised how the Deoleo chief had called for common standards of identity for olive oil.

“Even though we are dealing with a unique product, fantastic product, in my opinion, we are confusing the consumers. We are just confusing them. There is no formal standard – it’s a mess,” he said.

“The European Union has its own rules, International Olive Council has standards, but Australia has its own and, in the US, there is no standard. No common rules, nothing. In this vacuum, the bad guys are winning. The bad guys are transforming this industry in a commodity.”